The dilemma of innovation, and the tyranny of 'best practice'
There's a dilemma at the heart of the movement that anyone who has 'quality' – written or unwritten – in their job description needs to be thinking about.

It's captured by the headline messages of the new economy gurus – the Tom Peters and Gary Hamels of the business glitterati – who say, in effect, 'innovate or die.'

The dilemma, stripped down, is this: innovation depends on creative destruction, on a willingness to walk away from what works now and take a punt on what might work tomorrow. But the cornerstones of high performance and continuous improvement – team work, effective strategising, customer satisfaction, process superiority, leveraged by best practice and benchmarking – are often the result of years of hard work, deeply ingrained in the culture of successful organisations.

The dilemma emerges in a number of ways. In Meeting the Challenge of Disruptive Change (Harvard Business Review, March-April 2000), Christensen and Overdorf say it's no wonder that innovation is so hard for established firms – they employ highly capable people, then set them to work within processes and business models that doom them to failure.

Three factors affect what an organisation can and cannot do, these authors say: resources, processes and values. Access to abundant, high quality resources (both tangible – people, equipment, technology, cash, and intangible – information, brands, relationships) increases an organisation's adaptability.

Processes, 'the patterns of interaction, coordination, communication and decision-making' used to transform resources into products and services, are meant not to change – that's what compliance and ISO 9000 is all about, right?.

Values are defined broadly as 'the standards by which employees set priorities…' The larger the organisation, the more important it is that managers train employees to make choices (value judgments) that are consistent with its strategic direction and business model, and a key metric of good management is the extent to which such clear, consistent values have permeated the organisation.

So where's the innovation dilemma? Well, 'consistent, broadly understood values also define what an organisation cannot do.' They limit the ability to innovate. In new organisations, resources matter most – people particularly. But over time, capabilities shift to processes and values, and eventually to culture – a powerful management tool that 'enables employees to act autonomously, but causes them to act consistently.' The further along this path, the more difficult it is to innovate.

Let's say you've decided that innovation will be a factor in your continued success – whatever you do. What's the answer to this dilemma? Christensen and Overdorf say processes are not as adaptable as resources, and values even less so. When you need new processes and values – because you need new capabilities – think about creating new organisational space. Either by fencing off new structures within existing operation – set up a skunkworks in a garage out the back; by spinning off bits to start afresh; or by acquisition, buying in the required capabilities ready-made.

If you're racing to capture markets which may be changing every day, you can't afford to obsess about process. Quality is still the key to success, but it's all about the people things – leadership, strategy, how the organisation deals with recruitment and retention, rewards and incentives – and about customer and market focus. Christensen and Overdorf's argument is that processes, values and culture will follow.

Another variation of the dilemma centres around the use of best practices. Back in March, 1999, Merrill Lynch Innovation Fellow Michael Schrage wrote a FORTUNE article titled “When best practices meet the intranet, innovation takes a holiday.” His point was that best practice models, intended to empower individuals and their teams and promote excellence, actually enforce compliance with organisational norms. The networks to organisational hell are wired with good intentions, he wrote, ignore them at your peril. You've got a great new idea? What about the best practices we already have? Why didn't you implement them first? Don't you believe in peer review? Hey, are you a team player or what, bro?

You guessed it – out the window goes innovation! “Thanks to the irresistible rise of networks,” Schrage wrote, “the distance between making a virtue of necessity to making a necessity of virtue is vanishingly small.”

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